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Data Protection, Consent and Prospect Research

Posted on by NicolaW

Many of Factary’s clients and colleagues have been in touch with us recently voicing their concerns, frustrations and confusion over recent news regarding the use of personal data in fundraising and prospect research. It’s not surprising that there is confusion; this year has seen a whirlwind of news and opinion from various regulatory bodies, some of it conflicting.

Our clients have asked if we can provide some clarity – this is a tall order right now as the situation is not completely clear and evolving more-or-less by the day, but below we have outlined recent events, the current situation and news on what is happening over the next few months.

The current situation – how did we get here?

As we know, 2015 was a challenging year for fundraising and charities in the UK. Negative press reports regarding certain fundraising practices ultimately resulted in a review of all fundraising and the publication of the Etherington Review in September 2015, which outlined recommendations for the future of fundraising.

Recommendations in the Etherington Review included that a new Fundraising Regulator be established (to set and promote standards for fundraising practice) and a ‘Fundraising Preference Service’ (FPS) be launched. The Fundraising Regulator launched in July 2016 and is in the process of setting up the FPS so that “individuals only get the fundraising communications they want and need”.

Whether or not people feel the FPS is necessary (alongside the MPS, the TPS and PECR), the decision has been made and the Regulator is aiming to launch it sometime in 2017. The official consultation period on the FPS has passed but the proposal papers can be viewed here.

The Etherington Review also worked closely with the ICO in developing the recommendations. It was outlined in the Review that the ICO had not been communicated with sufficiently in the past by either the Institute of Fundraising or the (now defunct) Fundraising Standards Board and that a stronger relationship between the new Regulator and the ICO should be established.

The upshot of this is that the ICO turned its attention to the non-profit sector and began reviewing if and/or how charities were adhering to the Data Protection Act (DPA) and PECR through fundraising practices such as direct marketing, telephone fundraising and electronic communications.

The general issue of consent

The ICO have been in attendance at many fundraising conferences, seminars and events this year, usually alongside representatives from the Regulator. The ICO have outlined their concerns over how well (or otherwise) non-profits have been adhering to the DPA, with a particular focus on the apparent lack of evidence around ‘consent’ for non-profits to use the personal data of their supporters. This is not just about obtaining consent from supporters for non-profits to hold personal data on a database but also about obtaining consent for how the data is then used for marketing, fundraising and, importantly for us, in prospect research.

The issue of gaining consent is simultaneously very clear and also incredibly complex. On the one hand, it is straightforward because there is universal agreement in the sector that supporters and donors should have proper control over their data, be able to communicate preferences to their chosen charities and have those preferences acted upon. The complexity comes with how and to what extent non-profits are expected to communicate with current and future supporters to gain consent for the use of personal data.

With the looming presence of the GDPR, scheduled to come into force in May 2018, the issue of consent becomes even more important (that said, to what extent the current format of the GDPR will be implemented is Brexit-dependent, so even this is unclear).

Current guidance on consent – where can you go for help?

There are several documents detailing regulations and guidance from the ICO in relation to consent and data protection:

Unfortunately, whilst useful, these aren’t hugely specific to the non-profit sector and only go some way towards clarifying the situation.

Helpfully, there are some other places where we can gain more clarity:

  • The Fundraising Regulator will be translating the ICO regulations and issuing some guidance on the consents that charities should obtain, sometime in the autumn/winter of 2016 (so, very soon).
  • In February 2017, the Regulator will also be starting a 3-month consultation period on updates/changes to the Code of Fundraising Practice, which will include reviewing guidance on data protection and consent (this is according to Head of Policy, Gerald Oppenheimer, speaking at the CASE Development Services conference in October 2016). Keep an eye on the Regulator’s website and Twitter feed and try to make sure you are a part of the consultation next year. The Code will potentially have a huge impact on fundraising practice – including prospect research – so try to make sure you and the organisations you work for have a say on the development and changes.
  • The NCVO have produced a report ‘Charities relationships with donors; a vision for a better future’. This report contains sample statements showing how non-profits can obtain consent to use personal data and it will inform the Regulator’s development of guidelines for the Code of Fundraising Practice. It is worth noting that these guidelines conflict with the ICO’s recent statements around how consent for prospect research should be obtained (see below).
  • CASE are also in the process of writing guidelines on consent for education institutions. These will be available on 25th January 2017. These guidelines will contain example privacy policies and sample donor communications, hopefully also including information on prospect research. Whilst the guidelines will inevitably be steered towards alumni databases and communications, they will no doubt be helpful to all non-profits, so they’ll be worth looking out for. Keep an eye on the CASE Twitter feed for more information.

But what does this all mean for prospect research?

All the guidance and regulation noted above is (or probably will be) quite broad, relating to consent for all forms of fundraising/marketing – but the ICO review process has also had some interesting consequences for those of us working in prospect research and, by extension, major donor fundraising.

Throughout the course of 2016, a representative of the ICO has stated at various events that non-profits will not only need to obtain consent to use personal data for fundraising/marketing but also for all forms of prospect research. This could mean that consent will need to be obtained for each part of the research process (e.g. data screening, segmentation, data modelling, appending wealth, profiling etc.). Additionally, the ICO have outlined that this isn’t just about gaining consent to use the personal data given when a supporter, for example, makes a donation, but also for any data pertaining to the person in the public domain; so, in practice, this might mean obtaining consent from individual supporters to access their details on Companies House or other common research sources.

There are clearly numerous concerns with this.

The main problem is that, as this has been a relatively fast moving situation, there is currently very little guidance on how non-profits should go about incorporating prospect research consent into their privacy policies, consent forms or fundraising communications. Nor has then been any clarity on how explicit the consent will need to be. Our view is that it is unworkable to expect supporters to give separate consent to each and every fundraising, marketing and research option that they may be presented with.

Also, on a practical note, in this post on the GDPR, Christian Propper at Graham Pelton Consultants asks two pertinent questions:

  • How can we ask for consent for database screening, profiling and other research techniques in a way that doesn’t unduly worry supporters?
  • How can non-profits future-proof their current consent/privacy statements to encompass research practices they may adopt in the future (but might not yet even know about)?

In short, how can prospect research ensure it is on the right side of regulation whilst also being able to continue contributing to fundraising in all its myriad, wonderful ways? The short answer right now is that, unfortunately, there is no clear guidance on this. All we know is that (as outlined above) the Regulator is working on best practice guidelines on consent which we assume will include consent for prospect research.

There are a few papers/articles that might be helpful to review around this issue;

  • The NCVO report, mentioned above, which can be downloaded here, is useful to read if only from the point of view that the ‘best practice’ sample statements on consent only mention research in passing and certainly not to the extent that the ICO has suggested is necessary, e.g. ‘We may from time to time use your data for profiling, targeting and research purposes so that our communications to you are as appropriate and cost effective as possible’ . It will be interesting to see if this approach is adopted by the Regulator when they bring out their official guidance.
  • The team at the Commission on the Donor Experience are working on a project around ‘giving choices and managing preferences’. Ken Burnett from the Commission wrote this article in which he outlines a practical way to ensure ‘continuous donor choice’. This step-by-step guide could easily be modified to include information on prospect research and is one sensible option for communicating with supporters. The Commission is working with the Regulator so something akin to this approach may be adopted in the guidelines for the Code of Practice.
  • Adrian Beney at More Partnership produced an excellent briefing paper on ‘More Partnership briefing for NCVO on Wealth Screening and Profiling’ earlier this year in response to the initial draft report from the NCVO. The paper puts prospect research into context and questions some of the ICO’s opinions on how data is used in fundraising and the types of consents non-profits should reasonably be expected to ask for. If your role encompasses prospect research this paper would be an excellent reference guide to understanding ICO regulations and prospect research.

So, what should I do now?

Our advice would be, first of all, not to panic about the conflicting news and opinion you may have heard. If you feel there are possibly areas where your organisation needs to improve communications around consent to use personal data then, alongside your day job, you could perhaps:

  • look into the consent options, donor communications, privacy policies and data processes that are in place in your organisation, alongside reviewing the ICO documents for direct marketing and PECR (links above)
  • consider undertaking a ‘privacy impact assessment’ to highlight areas your organisation may falling short on data protection
  • ensure you are a part of the Fundraising Regulator’s consultation process in 2017; the more involved we all are, the more likely that the guidelines will be workable for us
  • attend the Researchers in Fundraising conference in November 2016 – a representative from the ICO is speaking on the topic of data protection and consent
  • support the Researchers in Fundraising ‘data protection working group’, who are working with the ICO and the Fundraising Regulator to ensure prospect research is part of the conversation – keep an eye on the RiF news webpage and Twitter feed for developments on this

Also, keep an eye on Factary’s Twitter feed or let me know if you’d like to join our mailing list to be kept informed of any further news or announcements relating to this topic. We’re keeping a close eye on developments and would be happy to disseminate information.

And finally; remember that prospect research has an enormously positive role to play in fundraising. We need to keep in mind that our work is of tremendous consequence. So, when it comes to drafting future communications / privacy policies with supporters, please keep in mind this excellent Tweet from Adrian Beney at More Partnership wherein he encourages us to, “Tell people what you’re doing. Be honest. And open. And unashamed of what we do to help create a better world.”

If you’d like to discuss any of this in more detail or if you are concerned about consent or data protection, please contact me nicolaw@factary.com.

How Much Can She Give? Some maths, from Spain

Posted on by Chris

Prospect research in continental Europe is tough. You spend your life saying ‘if only we had [fill in name of favourite source]’.

There are rays of light, as Europe gradually opens up to transparency, but they are rarely truly illuminating.

The hardest part is to try to estimate Gift Capacity. At Factary we define Gift Capacity as ‘the largest gift that an individual could give to any cause in ideal circumstances, over three years.’ By defining it that way we are saying, as objectively as one can in the murky world of money, that this is the best of the best, the biggest possible gift. Not ‘how much she will give to my charity‘, but how much she can give. And not ‘how much can she give this year?‘, but an amount spread over a period of three years.

How much she actually donates to your cause depends on many factors, including the strength of the connection to her, her positive and negative feelings about your organisation and, of course, how much you ask for.

But here in Catalonia and Spain, even the starting point for Gift Capacity research is difficult. So it is a Red Letter Day when some data on wealth appears.

The annual publication on directors’ salaries by the Stock Exchange Control Committee (CNMV, www.cnmv.es) is just such a day. The 2015 report was published last week.

In part the interest is vicarious. Learning that the Executive Chairs of Ibex-35 companies are now earning an average of €3.45 million is galling when you are a prospect researcher in Spain (average salary unknown but unlikely to be more than €25,000, and mostly under €20k); those Chairs earn more in three days than you earn in a year of labour.

But the data – the full report is here – does help us. Non-Exec directors are now earning an average of €763,000, up a staggering 48% on the previous year (clearly these are hard-working men and women), and the average across all quoted company directors is €344,000, up a mere 8.2% on the previous year.

So now you have an idea of how much she is earning, can you reliably calculate gift capacity?

Unfortunately, there is very little data to help you do that.

A 2006 study of tax returns [1] showed that people earning more than €600,000 per annum were giving an average of €3,268 – meaning 0.54% of their income. This was their declared giving on their declared income, and both figures are likely to be conservative.

So at your most cautious you could say that the Executive Chair of an Ibex-35 company might give 0.54% of €3.45 million, which would be €18,760.

That’s a start!

1. Sánchez Pérez, Elisa. ‘Evolución y situación actual de la filantropía en España’. In La Filantropía: Tendencias y Perspectivas, 125–46. Papeles de la Fundación de Estudios Financieros 26. Madrid, 2008. http://www.fef.es/new/publicaciones/papeles-de-la-fundacion/item/189-26-la-filantrop%C3%ADa-tendencias-y-perspectivas.html.

Fundraising in the Middle East: How, Why and What?

Posted on by Chris

People give.

Wherever you are, at whatever time in history, you will see people giving to help others. Poor people give, rich people give, young and old give.

Our role as professionals in fundraising is to mediate the giving, to help people find the cause that best fits their vision of how the world should be. We help people to structure and organise their giving, show how they are making a change to the lives of others, and stand as guarantors for the honesty and impact of our organisations.

That is what is happening in the Middle East and across the Arabic-speaking world. Ancient traditions of personal philanthropy – a cultural norm and a religious requirement – are evolving rapidly thanks to the work of philanthropists, governments and rulers…and fundraisers.

I’m giving a Masterclass with UNHCR’s Reem Abdelhamid on fundraising in the Middle East, at the International Fundraising Congress, 18-21 October, Noordwijkerhout, Netherlands

A LOT OF WORLD

The total population of the Arabic-speaking world – the 22 nations of the League of Arab States – is 392m people (5% of the world’s population), of whom one-third are under 15 years old. Despite the horrors of war and of the forced movements of people – the stuff we see in our news media – the region is developing the social and cultural infrastructures that allow fundraising to evolve; education, taxation, financial systems, the legal and fiscal formalisation of charities and foundations, and personal wealth.

Fundraisers get a rush of blood to the head at the phrase ‘personal wealth.’ We have stereotype pictures of fabulously rich individuals dropping millions into the hands of eager fundraisers in Europe’s leading universities and museums. But that is only a small part of the story. Because personal wealth is spreading outward into a growing middle class, who are becoming the day-to-day donors of national and international organisations.

WHAT NOT TO DO

This is the third consecutive year when we have had IFC workshops or Masterclasses on fundraising in the Arabic-speaking world. Each time, we have learned a little more about how to operate in the region – and what not to do.

NOT A CASH MACHINE

Reem Abdelhamid, UNHCR Advisor for Private Sector Partnerships in the Kingdom of Saudi Arabia, warned early in the series that the region is not a cash-machine. No-one should be planning to hit the streets of Jeddah or Dubai, raise lots of money, and head off.

As UNHCR and other INGOs have found, the Arabic-speaking world requires – just like any other region – careful research, planning, long-term investment and clear links between the donor and the social or environmental problem they are solving.

IT’S NOT ONE PLACE

You would not treat Europe, Latin America, or Asia as one homogeneous region. The same is true of the Arabic-speaking world, where the fundraising that you might do in Kuwait is different from that you would do in Egypt. In part this is because a significant part of the region is a historic area of transit between Europe and Asia – so there are different mixtures of cultures, religions, languages, and thus of philanthropy in different states, and even in different cities. To get a clearer idea of the variation across the region, read the publications from The John D. Gerhart Center for Philanthropy & Civic Engagement at the American University of Cairo.

THINK LOCAL

To make sense of the region you are going to need local help. Houssam Chahin, who has years of experience in the region first with Greenpeace then with UNHCR, stresses the importance of recruiting and developing local teams. This is no different from opening a branch in Germany or Japan; you need people who not only speak the language but who understand the culture and know the market. People who know why this Sheikha is important, and who understand why she might not want to meet you but would meet a female colleague instead. People who can cope with the contradictions that emerge in any developing market, and who can help your organisation steer its way around the legal restrictions that may appear.

POLICY MATCH

In Western Europe we are used to the idea that NGOs challenge governments – campaigning for freedoms, rights and the environment. You are not going to get a warm welcome if you enter the Arabic-speaking region on a campaign ticket. Just reverse the situation and imagine a Kuwaiti foundation opening an office in Europe to campaign against – to pick a ridiculous example – vegetarianism, and you will see why. The developing states of the region have national plans and priorities, and philanthropy, especially strategic philanthropy or ‘major donors’ is often aligned to these priorities, so your fundraising is going to be aligned that way too.

COME AND FIND OUT MORE

The Arabic-speaking world and within that, the Middle East, is a fascinating, fast-changing, challenging environment for fundraising, with huge potential. Come and join Reem Abdelhamid and me for our Masterclass on ‘Fundraising in the Middle East: How, Why and What?’ at IFC 2016, or one of our workshops that will focus on key issues in fundraising in the region.

But do it now; there are only two places left on the Masterclass!

Follow us on Twitter:

@chrisfactary
@reemgazzaz

Factary and Europe

Posted on by Chris

Dear customers, friends, colleagues

A brief note to reassure you that Factary will continue to provide services – consulting, prospect research and training – across Europe despite this morning’s referendum vote.

We will be following the negotiations closely and will continue to act, as always, in the best interests of our customers, our colleagues in the non-profit and philanthropy sectors, and of the beneficiaries that you serve.

We will monitor any implications that this vote may have for cross-border philanthropy and fundraising, and we are ready to discuss any concerns that you may have in this area.

Do feel free to contact us to discuss any questions that you may have, at any time.

All the best

Chris Carnie
chris@factary.com
Martine Godefroid
martine@factary.com
Marc Low
marc@factary.com
Nicola Williams
nicolaw@factary.com

A Window on Philanthropy in Italy

Posted on by Chris

Another window on high-value philanthropy just opened in Italy thanks to UNHCR and Gruppo Kairos, a private banking and wealth management firm. In March, UNHCR published the results of a survey carried out with the finance firm. I am grateful to Giovanna Li Perni at UNHCR for a copy of the report, and for her presentation of the results at last week’s Festival del Fundraising.

During October-November 2015 Kairos asked its HNWI clients to complete a questionnaire; 91 of them, 44% women, 56% men, did so. This is not therefore a balanced representative sample of people of wealth in Italy (so we cannot safely extrapolate the results) but does give us at least some insight into how this group of people reacted. The group included a wide range of wealth levels from €1m to more than €30m, and a spread of age groups with, as you would expect, a bias toward middle age and older (85% were aged 46 or over). Almost all of the group were donors – 91% had made at least one donation to a social cause in the previous year (against 26% of the general population). The percentage who gave rose with increasing wealth, reaching 100% of people with wealth over €30m.

When asked about their largest gift during 2015 to any one organisation, most reported €5,000, with 73% of women giving at this level and 49% of men. Older people tended to give more, so 22% of the over-65s gave €25,000 and 11% gave €50,000. Of course these people were giving to a number of organisations, so 30% of this older group gave away a total of between €50,000-€100,000 in 2015.

Asked about the causes to which they made their largest gift in 2015, 21% chose scientific or medical research, 19% favoured children’s causes, and 16% poverty in Italy. Importantly for UNHCR, 10% chose help and protection for refugees as their top cause. 62% gave principally to causes in Italy.

Why did they give?

More than half (52%) said that their main reason for giving was because they felt privileged. 26% said it was giving made them feel useful. Interestingly just 4% of donors said that they gave because of their religious values, with 9% saying that they want to change things, to make a difference and the same percentage saying that they gave to continue a family tradition of philanthropy.

In choosing a non-profit, two major reasons stood out; the cause, and ‘transparency of the organisation and exhaustive documentation on results.’ This focus on transparency is interesting and is part of a trend we can see across Europe toward greater transparency in the non-profit sector. New laws (for example, in Holland) and new organisations (for example Fundación Lealtad in Spain) are encouraging this trend toward transparency.

Italians will tell you that business in the country is based on personal connections, and it seems that this might be true for philanthropy also. It is certainly the case for this group of philanthropists, who say that the most common channel for hearing about the organisations they support is via their personal network (28% of respondents, the largest single group), while 15% say that they chose the cause because they knew the leader of the organisation in person.

What does this tell us about strategy?

The information in this report is gathered from the clients of one bank, so we should be careful about extrapolating from it. But given that there is almost nothing else available on HNWI philanthropy in the Italian market, we might at least test some conclusions.

The research should help push up the pricing of ‘major donor’ programmes. Individuals responding to this survey have made gifts in excess of €100,000 to single organisations, and 20% of them have made gifts of €25,000 or more. We can even venture a Gift Capacity calculation for this group, defining ‘Gift Capacity’ as ‘The largest total gift that one person could give to any one cause, in ideal conditions, over five years’ (see my previous blog on this topic.) Five of the respondents with net worth of €5-€10m made gifts to single organisations of €100,000 or more, between 1% and 2% of their net worth.

The research makes the case for prospect research. It shows that personal networks are the means by which these HNWIs have been reached by their non-profit partners, and that these networks are their primary source of information. Prospect research has the tools to identify personal networks. Sadly, the number of prospect researchers in Italy is still in single figures.

This research was carried out in partnership with Gruppo Kairos, and we have here a strategic clue that a number of NGOs in Europe are starting to follow up. Private wealth managers and bankers are increasingly interested in philanthropy, and we would all do well to focus more attention on this key group of intermediaries.

This is the second year in which UNHCR and Kairos have carried out this study, and the plan is to continue the annual series; another opening window on the world of HNWI philanthropy in Europe.

The Edge of Privacy

Posted on by Chris

We live in interesting times, privately.

Confusing, contradictory times, when lawmakers require us to lock-down data whilst revealing their intimate thoughts on Twitter. Times when it is OK for a dominant search engine to track our billions of tiny searches, for our wrist watch to measure and transmit our sleeping and walking in the name of fitness. Times when we choose to tell our life stories in Facebook.

And times when our private underbelly is revealed to the world. Two stories have exposed privacy in all its moral complexity; the Panama Papers, and the Ashley Madison data breach. Both have been stories about activities that are legal (being a director of an offshore company and having an affair, or both simultaneously, are not illegal activities.) Both are about normal immorality.

Both stories are to some degree about power. The Panama Papers show us that the powerful are willing to mix their businesses with drug dealers, dictators and money launderers in order to avoid taxes. If you need to be reminded about just how powerful these people are, bear in mind that just one person was prosecuted out of the 1,000 UK names released in the last big tax-related data breach; the Falciani/HSBC affair [Source: ‘Tax Havens don’t need reform, but abolition’, Richard Brooks, Guardian Weekly, 8/4/16]

Both the Panama Papers and Ashley Madison are about relationships, a subject at the heart of prospect research. John knows Jane because both of them invest in the same company in the British Virgin Islands. And John knows Mary because he signed up for Ashley Madison and she’s his new friend.

John is a donor to your charity. He’s in your database, and he has turned up in a screening (carried out, naturally, by Factary). We’ve spotted him in Companies House, a public domain data set, as a director of an investment firm in Holborn, so we have flagged him as interesting.

When you transferred the data to Factary you took the utmost care over the process, using our sFTP (secure FTP) site and thus ensuring that John’s details were encrypted and safe. You checked that the computer link was over a HTTPS network. You made sure that the data would be stored in servers in the UK, in a physically safe and secured building. You did that because you are a conscientious prospect researcher, using the best practice required by the law.

John did not take the same care. When he invested in the British Virgin Islands via Mossack Fonseca he did so through the open web, by email. He joined Ashley Madison the same way, signing up on their website; no encryption, no security. Worse, he was voluntarily exporting his data outside of the protection offered by the European Union through its Data Directive.

And now John has a photograph of him and Mary together at a work conference and he’s posted it on his Facebook page.

Where is the edge of privacy?

Is it the frontier between long standing public domain records and the new stuff, between Companies House and Facebook, for example?

Is it between voluntarily released information and stuff that is Wikileaked?

Is it between Victorian morality and modern – between a marriage notice in the Telegraph, and Ashley Madison?

Above all, is it where people of power dictate it should be? So that we are allowed to see the company directorships of the little people, but cannot see into the murky world of British Virgin Islands connections? Or into the equally dark corners of political connection and patronage?

This is where we are, like it or not, in prospect research. Prospect researchers live on the edge of privacy, using personal information that is in the public domain, for public good. We research John Doe in order to help our fundraising colleagues reach out to him for a donation that will benefit a poor person, or a scholarship kid, or an eye-opening cultural event.

But the power of research comes with a responsibility; it is our profession that must lead the debates on power and privacy, on public domain and private.

Thank goodness it is us, because prospect researchers have a special moral compass. We have chosen to work for causes we believe in, to make sacrifices (anyone want to talk about pay rates for researchers?) for something we believe to be right and good. We have chosen not to sit in the glory seat in fundraising; we are clearly not in this for vanity or fame. We know the value of information, and we have seen the intimacies and the inanities that people are willing to share on the web. We chose every day between information that is right and relevant, and rubbish.

Prospect researchers are the best placed people in the non-profit sector to describe where a private life becomes public.

But we had better get out there and get talking; our donors, our colleagues and our organisations need our guidance as we walk, together, along the edge of privacy.

Five ways to make use of donation data

Posted on by NicolaW

There has been some interest online over the past few months in how prospect researchers can make the best use of ‘donation data’ – i.e. databases, reports and websites that list donations, showing who gave, how much, and to whom.

Recent blogs such as this one from iWave inspired us to carry out a survey amongst our subscribers to Factary Phi to find out for ourselves how and why they are using donation data. Some of their answers were unexpected – we found out that our subscribers are very imaginative when it comes to making use of data on donations in their research. Below we have outlined some of the ways our subscribers have told us they’re making use of the data.

If you use donation data in your research, we hope the innovative approaches of our subscribers prove inspirational to you!

The five ways our subscribers are using Phi data

  1. To understand philanthropic interests to help identify the best prospects

    Overall (and perhaps the least surprising in many ways) was that a whopping 90% of respondents to our survey mentioned that the two ways they mainly use the donation data in Phi were to:

    1. Research existing prospects, e.g.:
      • “Searching by name and checking which causes [prospects] are giving to, to determine philanthropic interests”
      • “Get a sense of causes these donors or prospects support”
      • “Research other charities supported by existing supporters and prospects”
    2. Find new prospects, e.g.:
      • “Identify people supporting competitor charities/similar causes through searching by [recipients] activity type”
      • “To identify new potential prospects giving to a similar cause”
      • “Check who is giving to similar causes [and] check who is giving to particular causes”

    As we know, using research on donation history to find prospects with an affinity to a particular cause has been long proven as an effective strategy for understanding which of your current prospects might prove to be the most likely to donate – and also for finding new potential likely donors. This is because many donors will have a specific interest in a particular cause and will more readily consider donating to organisations operating in a similar field in the future (Breeze & Lloyd, 2013). This type of approach to the research was said to be useful for researching all types of prospects on Phi, including individuals, trusts and companies.

  2. To help researchers shape fundraising strategy

    Interestingly, prospect researchers using Phi told us that researching donation data can be a way that they can help their organisations to plan fundraising strategy. Subscribers noted that the breadth of data on Phi allowed them, together with additional research, to benchmark types of donors to similar organisations or projects, thereby gaining an understanding of the current fundraising market. So, for example, the research might show if individual major donors would be more or less likely to support a particular type of project or campaign than trusts & foundations. Armed with this knowledge, researchers can then advise senior management on the likely avenues for support, thereby shaping the fundraising strategy around the type of donor most likely to give.

    The ability for researchers to ascertain potential levels of giving was another factor mentioned in helping to shape strategy – by using Phi to research donation levels, researchers are able to estimate the potential eventual Ask for current donors and existing / potential prospects. Knowing a prospect’s previous donation levels to different causes is a useful way to gauge their likely or potential future donation to your cause – and arguably more accurate than basing their estimated gift capacity on wealth data alone. This donation information enables researchers to contribute to discussions around fundraising targets for campaigns and projects, potentially putting them in a central role during decision-making around prospect allocation and fundraising strategy development.

    Also, some researchers stated that the data on Phi also helps them identify local recipient organisations (by searching for donations to a particular region or town) to see if there are common funders or funding networks prevalent in that local area, thereby contributing to an understanding of the potential local prospect pool or philanthropic networks to be cultivated. This approach was said to help both national charities with local offices and also regional organisations (such as hospices).

  3. To encourage stronger relationships between fundraisers and researchers

    We thought this was a particularly nice benefit to researching donation data!

    Some of our respondents reported that fundraisers were more willing to take on prospects that a prospect researcher had identified if they could provide information to the fundraiser on the prospects’ previous donations. When these prospects turned out to be decent (and ultimately donated to the cause), the fundraisers were then more open to working with the researcher’s suggestions in the future, thereby creating a better working relationship.

    Respondents also noted that even where information on specific gift amounts was omitted from the donation search, simply identifying that the prospect is philanthropic was sometimes enough to encourage fundraisers to act on their suggestions.

  4. To understand how donors give

    Turns out, knowing how donors give is almost as important to researchers as knowing how much they give.

    Subscribers reported that having donation data which covers a broad range of types of giving is incredibly useful. Being able to see prospects giving via their charitable trust, their company and as an individual gives a quick overview of the prospects’ philanthropic portfolio. Using this information, researchers can then advise on approach strategies – e.g. whether to approach a prospect as an individual major donor or via their charitable trust for a specific project.

    Breeze & Lloyd (2013) reported that whilst 73% of rich donors give via their charitable trust, 49% also give one off donations, 28% give via standing order/direct debit and 22% are planning to give via their will. This breadth of giving is reflected in Phi, with donations showing donors giving via multiple channels, making the data useful for trust fundraisers, corporate fundraisers and major donor or individual giving teams. Being able to contribute to so many areas of fundraising can make a prospect researcher an invaluable and valued part of the wider team.

    One subscriber also mentioned that the inclusion of political donations on Phi was especially useful as, because they were new to prospect research when they first started using Phi, they wouldn’t have thought of political donations as a source for prospect information. Also, US research in 2015 by DonorSearch reported that individuals who gave >$2.5k in political donations were 15 times more likely to give to a charitable organisation than those who hadn’t (whether this is also true of political donors in the UK is unclear, however).

  5. To improve the perception of researchers in their own organisations

    Perhaps our favourite benefit of all!

    As stated above, relationships with fundraisers have been known to improve through using donation data as a research tool, but subscribers further noted ways in which making use of donation data in different ways can highlight the enormous contribution prospect research makes to a team. Some examples are:

    • Prospect researchers use the data to increase their knowledge of the prospect pool and to prioritise long lists of prospects by previous giving – this is invaluable information when discussing cultivation strategies and allocating prospects to fundraisers.
    • Data on giving history enables researchers to boost numbers of new prospects, which can bring research into a more central role when moving through a campaign, for example.
    • Research into philanthropic interests had highlighted where prospects had made large gifts to other organisations that had strong links to their own Trustees or Chairman. Noting these links and connections was hugely important in devising an approach strategy for the prospect and wouldn’t have happened about without the research into philanthropic affiliations and donation history.

One more thing…

Perhaps the best outcome of all, for everyone involved, is to know that some of our subscribers have stated that research into prospects’ donation history ultimately helps lead to new gifts for their organisations. Which is, after all, what it’s all about!

We hope this proves useful for you in your own research.

And, finally…thanks to all of the subscribers to Factary Phi who took part in our survey!

Foundations of Wealth Revisited: A Story of Growing Potential…

Posted on by willw

For three years Factary produced a ‘Foundations of Wealth’ report focused on the Ultra High Net Worth Individuals (UHNWIs) and High Net Worth Individuals (HNWIs) (minimum estimated wealth of £10m) that founded grant-making trusts and foundations, featured in Factary’s New Trust Update during 2012, 2013 and 2014. We have now revisited these trusts and foundations to see how they are performing financially and what this means for hopeful beneficiaries.

These three reports, all available for free to New Trust Update subscribers via the new online archive service, contain profiles of 104 philanthropists and their grant-making trusts and foundations, of which nearly half are not on Trustfunding.org. Top of the list in terms of estimated wealth is Mrs Usha Mittal (£9.2bn) with other billionaires including the Swire family, the Fleming family, Ian Livingstone and Spiro Latsis. Together they have a combined estimated wealth of £34.36bn – the question is, how much of their wealth are they giving to charitable causes?

Based on financial information from the last financial year 98 trusts and foundations (six are still yet to submit their first set of accounts to the Charity Commission) had a total expenditure of £26.17m. Only seven had a total expenditure of over £1m in the last financial year whilst over one in 10 had an expenditure of £0 despite some having been registered for three years now. This is somewhat disappointing, especially when compared to their estimated wealth which shows that the average expenditure as a percentage of estimated wealth is a meagre 0.08%! Only seven individuals gave over 1% of their estimated wealth to other organisations in the last financial year, with the most generous person giving just under 3% of their estimated wealth as grants. This is well under the ‘5% of total assets’ figure that is often used as the basis for estimating gift capacity for major donors…

The biggest giver in terms of charitable expenditure was Sir Peter Harrison – former Chairman and Chief Executive Officer of computer network company Chernikeeff. The Peter Harrison Heritage Foundation had a total expenditure of £4.5m in 2013/14 which included a grant of £2m to the Clarence House Restoration Project and £1.75m to the Imperial War Museum.

The most generous philanthropist, giving away the greatest percentage of his estimated wealth as charitable expenditure, was Sir Mick Davis – former Chief Executive Officer of the mining company Xstrata plc from 2001 until its merger with Glencore in 2013. The Davis Foundation had a total expenditure of £2.2m in 2014/15 which equates to 2.95% of his estimated wealth. Grant recipients were not disclosed.

Other significant grants awarded by these new philanthropists in the last couple of years include £6m from The Dorothy & Spiro Latsis Benevolent Trust to Great Ormond Street Children’s Hospital and £1m to Boston Children’s Hospital (both in 2013 and hence excluded from this analysis of activity in the last financial year), £2m to the UBS Optimus Foundation by The Holroyd Foundation, £1m to the Royal Shakespeare Company by Lady Sainsbury’s Backstage Trust and £770,125 to  Clinton Health Access Initiative by the Surgo Foundation UK.

Notable names that have been less than generous with their charitable giving via their foundations to date include Michael Lemos (son of Greek shipping tycoon Constantinos Lemos) whose CML Family Foundation donated £3,406 which is 0.001% of his estimated wealth of £605m and Richard Higham (Group Chief Executive of Acteon Group Ltd) whose Higham Family Trust had an expenditure of just over £6,000 in 2014/15, which represents 0.004% of his estimated £150m wealth. Some of those whose trusts and foundations have shown no financial activity include former CEO of wealth management company Towry Andrew Fisher, Conservative Party donor and Domino’s Pizza franchise owner Moonpal Singh Grewal and Abhisheck Lodha, Managing Director of global real estate developer Lodha Group.

Of course there will be a number of possible reasons why these figures are so low – not all their charitable giving is directed through their foundation; this is not their primary foundation; the nature of their wealth means they do not have high levels of liquid assets; or they are still in the process of building up reserves.

It is this last point that is perhaps of most interest when we look at the figures. Whilst the total expenditure was only £26.17m in the last financial year, the total assets of the 79 trusts and foundations for which data was available was over five times this amount at £148.7m. 25 of these have assets in excess of £1m and 10 have assets in excess of £5m. This equates to an average of 0.62% of the philanthropists’ estimated wealth, with 15 building up assets of over 5% of their estimated wealth.

The foundation showing the largest asset amount is The Christie Foundation founded by Iain Abrahams, the former Executive Vice Chairman of Barclays Capital. The foundation has assets of over £21m for 2014/15 which represents over 40% of his estimated wealth, making him the also most generous benefactor. So far the only identified donation made by his foundation is of £150,000 to the Elton John Aids Foundation, of which he is also a Trustee.

What this shows is the considerable potential these trusts and foundations have for the sector. Whilst they may not yet be giving at a level in keeping with their vast wealth, these UHNWIs and HNWIs are ear-marking significant amounts of their wealth to be given away to charitable causes over the course of their lifetime and beyond, sustaining the charitable sector for years to come.

The financial data for these 104 trusts and foundations, along with the three Foundations of Wealth reports and all the past issues of New Trust Update dating back to 2005, is available online to NTU subscribers. If you want further information about New Trust Update and our searchable archive please contact Nicola Williams.

Measuring the Immeasurable

Posted on by Chris

We prospect researchers say it all the time. But I’m not sure that our fundraising colleagues really get it.

 

It’s immeasurable. No, we cannot give you a precise figure.

 

An individual’s wealth is a private affair. Just how private is being made clear by the Panama Papers. Here we can see how people from footballers to political leaders hide their wealth and their income from public view. These are just the types of people that we prospect researchers are asked to analyse and measure; what is her wealth, and what is her gift capacity?

 

Bear in mind that Mossack Fonseca is described as Panama’s fourth largest firm in this offshore business. The Legal 500 lists five more leading firms operating in this sector in Panama. There are hundreds more in Panama, and more in the British Virgin Islands, Cayman, Gibraltar and any number of other fiscal watering holes. We are seeing, even with the 2.9 terabytes of information from Panama, only a tiny slice of the full picture.

 

The OECD reports that 27 of the 34 OECD members “store or require insufficient beneficial ownership information for legal persons, and no country is fully compliant with the beneficial ownership recommendations for legal arrangements.” In other words, as campaigners such as Andy Wightman have shown in his books on land ownership in Scotland, we cannot know who owns companies or who controls trusts.

 

The UK is rolling out regulations that will expose some of this – although information on the control of trusts (not the charitable sort, these are legal trusts) will only be available to ‘competent authorities.’ A grey phrase that, we can assume, excludes the, er, incompetent public. Business shareholdings of 25% or more will mean a declaration of beneficial ownership. It is worth noting that many of the schemes outlined in the Panama Papers involve small but valuable shareholdings. As Jake Hayman has already noted in Forbes, this is relevant to philanthropy.

 

The Panama Papers have many implications for prospect researchers. They are another mine of information – you will have to decide for yourself whether this is good practice, or not – on wealth. They remind us that we must be cautious with our estimates of wealth and gift capacity. And they demonstrate that our due diligence is less than comprehensive; if we cannot know who controls a business that wants to donate to us, or we cannot say  which companies Samantha Supporter controls, then how can we measure whether she meets our due diligence requirement?

 

I suggest sticking this version of The Panama Papers on the door of the Prospect Research office in your organisation:

1. No, we can’t tell you how wealthy she is
2. No, we can’t tell you who owns that property
3. Don’t expect due diligence to be really diligent. We’ll do our best, but don’t ask us to hack any more Panama lawyers.

Out. Here. Now.

Posted on by Chris

I met her on Tuesday, in Bilbao, Spain. She had started back in work on Monday after a two year break. Trained as a journalist, she had been allocated a new job at the NGO. One that had never existed, before Monday.

Paula is the NGO’s first prospect researcher. The latest recruit in Europe to fundraising’s most exciting profession.

Most exciting? Aren’t you being a bit hyperbolic, Chris? What about the glamorous folk who do events, or the facers on the street with their VR technology? Or the growing band of major donor fundraisers? Isn’t that more exciting?

No. They are welcome to their red carpets, their Samsung Edges and their private dining rooms. None of them are half as productive as a good prospect researcher, nor at such an exciting moment in the professionalization of fundraising.

 

Productivity

You are the Dean of a Business School. You want to run a €100m campaign to expand the School. You go out and recruit a team of 6 fundraisers and a couple of assistants. They tell you that they need good research, so you hire one prospect researcher.

The six fundraisers bring in a total of €120m. That’s €20 million each. Fabulous result … except that it would not have happened at all if you had not had that prospect researcher. She was the one who found the names you met. She was the one who found your top donors. She was the one who gave you the profiles and the briefings, suggesting you could ask more than you thought.

It’s her, the prospect researcher, who wins the productivity gold medal. Because she found most of that €120 million.

She is far too modest to claim that prize. But this month, Prospect Development Pride Month, she can.

 

It’s Exciting, here in Europe

Prospect research, and by extension philanthropy and fundraising, is going through a revolution here in Europe.

It’s a revolution in transparency. Thanks to the growth of professional staff amongst Europe’s foundations – staff who want to talk about their foundation’s successes – and thanks to governments pushing foundations to open up, we can see further, and deeper than ever before.

The Dutch Government has recently passed regulations requiring endowed foundations there to publish their accounts. The Catalan government has passed a law requiring transparency amongst publicly funded foundations, as has the Spanish government. Switzerland’s increasingly professional foundation sector has opened up with an association website, and the Scottish charity regulator is about to put many charity accounts online.

If you live on the other side of the Atlantic all of this will sound woefully like the Dark Ages. But for us, here in Europe, it is an exciting time. Because transparency means not only that we can do better prospect research but also that philanthropists themselves can see what their peers are doing.

A significant barrier to the growth of high-value philanthropy here in Europe is that people of wealth have no reference points for giving. A partner in a law firm does not know what partners in other law firms are giving, because the information is not anywhere in the public domain. In the UK there is now significant reporting of donations in the public domain; at Factary we research and compile this into Factary Phi. Continental Europe has been more reticent, but recently organisations including HEC, the Paris business school, or the Musée du Louvre have started to publish the names of major donors. At last, philanthropists in Europe can see how much they should be giving.

Transparency is transforming our profession.

Paula has an exciting career ahead of her. She is joining the profession at a moment when it is getting really interesting. She, like me, can be proud to be a prospect researcher.

 

#ResearchPride

This blog is inspired like so much in my career by the wonderful Helen Brown. She created #ResearchPride with this blog https://www.helenbrowngroup.com/coming-out/ . Now, each March is #ResearchPride month, so feel free to join in and spread the, er, good vibrations.

 

Helen is continually updating this post (she does not sleep, that girl) with new blogs on #ResearchPride at https://www.helenbrowngroup.com/proud-voices-in-harmony/

Here is a selection of other blogs on the topic:

http://apramidsouth.blogspot.com.es/2016/03/happy-prospect-development-pride-month.html
http://prospectdevelopment.blogspot.com.es/2016/03/evolve-by-getting-involved.html
http://searchresearch1.blogspot.com.es/2016/03/why-research-skills-matter-more-than.html?platform=hootsuite
http://www.jenniferfilla.com/researchpride2016/
http://www.prospectresearchinstitute.org/ivegotyourprivacy-researchpride/
http://www.staupell.com/blog/my-bourne-identity
https://diversitydrivendata.wordpress.com/2016/03/01/q-for-researchpride-month/
https://srbernstein2.wordpress.com/2016/03/11/if-i-could-save-time-in-a-bottle/
https://www.iwave.com/2016/03/02/prospect-research-pride-month/
https://www.linkedin.com/pulse/five-reasons-why-my-work-life-prospect-development-sharon-parkinson


Twitter hashtag: #ResearchPride